How Healthy Are Your Customers? Measure Customer Health Score To Find Out.
The magic of the SaaS business model kicks in the longer your customers stay with you, the more value they get, and the more they buy from you.
So it’s essential to know how healthy your customers are and if they’re getting value, right? You bet. But when we look across SaaS companies, it’s a good news, bad news kind of story.
Good news…there’s a metric that tells you at a glance how healthy your customers are. The Customer Health Score.
Bad news…only 30% of 350 SaaS companies surveyed use “Health Score informed Calls to Action” to increase the health of their customer base (source)! So we need to change that. Let’s dive in.
Why use customer health scores anyway?
They give you visibility at a glance into which customers are adopting your solution and getting value versus which customers are struggling, disengaged and ultimately at risk of churning.
Among other benefits, customer health scores help you:
- Prioritize customer-facing effort based on data not decibels
- Refine your Ideal Customer Profile so you’re not jamming square pegs into round holes
- Keep internal stakeholders informed so there are no surprises when a customer churns
How to get started? Crawl > Walk > Run
Top of mind, here are some tips for getting started with Customer Health Scores in a B2B SaaS context (assuming you have less than say 100 customers).
1. CRAWL – Keep it simple and just start. Make a list in a Google Sheet of all your customers. Using your gut, assign them green, yellow, or red. Make a legend to define what you mean by green, yellow, or red. Socialize the list with other customer-facing resources internally and see if they agree. Notice the various reasons people give for marking a customer red vs green.
2. WALK – Based on your observations above, create a simple health score model containing a few (3-5) dimensions that you believe have an impact on customer health at your company. Examples below. Give each factor a weight. Then compare to your green, yellow, red. Did the score work out the way you thought? Make any tweaks. Then start using it and iterate as you learn more.
Some factors to consider including:
- Product usage: logins, consumption, running integrations
- Support tickets: how many, how severe, time to resolve
- Strength of relationship: multiple levels in the company vs single threaded, referenceable client, actually gave a reference recently
- Business outcomes: did you capture them, does the customer say they’re achieving them, can you actually measure they’re achieving them
- Customer satisfaction and sentiment: voice of the customer survey based input
- Customer fit: how well do they fit your evolving hypothesis about your Ideal Customer Profile
- Solution fit: how well does your product fit their needs TODAY
- CSM score: what does your gut tell you as a Customer Success Manager
3. RUN – Automate your health score calculations and reporting in a CS platform. Pull data directly from underlying source systems like product usage tools, customer support ticketing software, survey tools, and your CRM. Continue to iterate on the criteria and the % weighting, informed by customers who expand and customers who churn. Health Scores are living things that will continue to change as your company matures.
For more info, check out these resources:
1. What is a Customer Health Score by Churn Zero
2. How to Score Customer Health by Gainsight
3. The Customer Success Index by Gainsight and RevOps Squared
About SaaSCan
SaaSCan for Scaleups helps scaling North American SaaS companies increase revenue and improve the customer & employee experience through scaling Customer Success, and Customer Journey Mapping.
